Tax Board: Estonia suffered €86 million loss in 2018 due to cash wages ({{commentsTotal}})

Wages. Photo is illustrative.
Wages. Photo is illustrative. Source: (Reuters/Scanpix)

According to an analysis by the Tax and Customs Board (MTA), the Estonian state suffered €86.4 million in lost tax revenue last year, up from €84.1 million in 2017.

Based on a study of the shadow economy commissioned by the MTA and conducted by the Institute of Economic Research, the share of employees receiving cash wages decreased from 13 percent in 2017 to 6 percent last year.

MTA Deputy Director General Rivo Reitmann said at a press event on Tuesday that according to a risk assessment conducted by the tax authority, the level of loss resulting from cash wages has remained unchanged.

He noted that, of the €86.4 million, €65.1 million were partial cash wages, while €21.3 million were entirely illicit wages, and added that the share of partial cash wages was on the rise.

Losses resulting from cash wages accounted for 2.67 percent of the income from labor taxes in 2017 and 2.56 percent thereof in 2018. The risk of paying partial cash wages lies with some 16,000 businesses, according to the MTA.

The study conducted by the Institute of Economic Research indicated that people's attitudes toward cash wages have remained unchanged over recent years, with 69 percent against, 13 percent in favor of and 18 percent indifferent toward illegal wages.

The same study indicated that the share of people who know someone who receives cash wages had declined somewhat. According to the results, in 2017, 24 percent of respondents knew some people who received illegal wages, while 10 percent knew several such people; last year, these figures had dropped to 22 and 5 percent, respectively.

A risk assessment conducted by the MTA indicated that the risk of receiving partial cash wages was greatest in Harju and Võru Counties at 7.6 percent, and lowest in Lääne-Viru County at 4.1 percent.

Reitmann added that the sectors using the most cash — construction and trade — were also the most affected by illegal wages.

Commerce chamber: Situation unchanged

The Estonian Chamber of Commerce and Industry has conducted a study of entrepreneurs' attitudes toward cash wages. Mait Palts, director general of the industry body, said that the situation has remained relatively unchanged, according to entrepreneurs, and partially illicit wages in particular continue to pose a serious problem.

A slight improvement had occurred, however, as the share of legal wages had increased somewhat, Palts added.

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Editor: Aili Vahtla



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